Consumer IoT Products More Expensive Than Non-Connected Comparables: Report
Consumers pay a premium for IoT-based products compared to similar products that are unconnected, according to a new report from Parks Associates.
The company’s report, “The business of Consumer IoT: Product Strategy in a Maturing Market,” found that consumer IoT products are priced 21% to 70% higher than those that are not connected. The average premium is 44%, according to the research, which includes the views of more than 100 executives across the connected home and consumer sectors.
The researchers found that most companies charge as much as 50% more for connected devices. That is followed by the segment charging more than 50% more. The smallest portion charged “essentially” the same for both connected and unconnected devices.
“The smart home and security markets benefit from delivering solutions that address consumer needs that only get stronger in uncertain times — safety and security,” Jennifer Kent, the vice president of research for Parks Associates, said in a press release about the IoT price report.
“This — along with growing demands on the grid due to electrification and data center development — gives stability to the smart home market and a positive outlook that may not hold in other economic sectors.”
Other findings of the IoT report:
- 90% of consumer IoT businesses are using AI internally for business processes. Seventy-nine percent are incorporating it into the end-user products or services.
- 51% are looking to expand product reach through new channels in 2025. Builders and multifamily properties are top targets of consumer IoT businesses.
- Executives report 86% of connected product units are connected to the internet.
- An average of 58% of smart product lines have a paid service attached. Both connectivity and paid service attach rates are highly dependent on the product type.
- Executives find integration with other devices in the home is more impactful in driving engagement than gamification techniques. Solving interoperability challenges leads to more value for the user and the business.